LCNB Corp. Reports Financial Results For The Three Months Ended March 31, 2021
04/20/2021 - 06:00 AM
LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three months ended March 31, 2021.
Net income for the 2021 first quarter increased 4.3% to $5,240,000 compared to $5,026,000 for the same period last year. Earnings per basic and diluted share for the 2021 first quarter were $0.41, compared to $0.39 for the same period last year. Earnings, before provisions for loan losses and income taxes, were $6,345,000 for the 2021 first quarter compared to $6,945,000 for the same period last year.
Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “Total assets managed increased to a record of over $3.0 billion , an important milestone for LCNB, as we benefited from strong year-over-year growth across all aspects of our business. Growth in trust and investment assets was particularly strong, which drove a 38.6% increase in fiduciary income. Our trust and investment businesses are important growth drivers, and we are benefiting from over 50 years of providing local, sophisticated, and diverse wealth solutions to our customers.”
Mr. Meilstrup continued, “Our asset quality is encouraging and we had limited net charge-offs in the quarter. At March 31, 2021, we only had six loans in deferral status for $19.6 million , which is a 94.9% decline from the amount of deferrals at June 30, 2020. We also continue to support small businesses within our local communities and during the first quarter we originated 345 new PPP loans for $23.6 million while processing $11.0 million of loan forgiveness under the program.”
1 Total Assets Managed includes LCNB Corp. Consolidated Assets, Wealth Management & Brokerage Assets, Loans Serviced for Others, and Cash Management Services.
“We believe we are emerging from the COVID-19 crisis with a dynamic platform to drive sustainable growth and I am pleased with the solid start to 2021. We remain focused on continuing to offer our communities leading and diversified financial services, maintaining strong asset quality, managing both our cost of funds and non-interest expenses, and increasing non-interest income,” concluded Mr. Meilstrup.
Net interest income for the three months ended March 31, 2021, was $14,372,000, compared to $14,178,000 for the comparable period in 2020. The 1.4% increase for the three-month period was primarily due to a decline in the average rates paid on interest bearing liabilities.
Non-interest income for the three months ended March 31, 2021, was $3,465,000, compared to $3,839,000 for the same period last year. The decline in non-interest income was primarily due to lower gains on sales of debt securities, bank owned life insurance income, gains from sales of loans, and other operating income, partially offset by fiduciary income and service charges and fees on deposit accounts.
Non-interest expense for the three months ended March 31, 2021, was $420,000 greater than the comparable period in 2020, primarily due to increases in equipment, occupancy, marketing, FDIC insurance, contracted services and other non-interest expenses, partially offset by a decrease in salaries and employee benefits.
Asset Quality
For the 2021 first quarter, LCNB recorded a $52,000 credit for loan losses, compared to a provision of $1,173,000 for the 2020 first quarter. The $1,225,000 year-over-year decrease in the provision for loan losses was partially due to strong asset quality and last year’s proactive build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic.
Net recoveries for the 2021 first quarter were $3,000 compared to net charge-offs of $210,000, or an annualized ratio of 0.07% of average loans, for the same period last year.
Non-accrual loans and loans past due 90 days or more and still accruing interest increased $497,000, from $2,868,000 or 0.23% of total loans at March 31, 2020, to $3,365,000 or 0.25% of total loans at March 31, 2021. Nonperforming assets to total assets was 0.19% at March 31, 2021, compared to 0.18% at March 31, 2020.
About LCNB Corp.
LCNB Corp. is a financial holding company headquartered in Lebanon, Ohio. Through its subsidiary, LCNB National Bank (the “Bank”), it serves customers and communities in Southwest and South Central Ohio. A financial institution with a long tradition for building strong relationships with customers and communities, the Bank offers convenient banking locations in Butler, Clermont, Clinton, Fayette, Franklin, Hamilton, Montgomery, Preble, Ross, and Warren Counties, Ohio. The Bank continually strives to exceed customer expectations and provides an array of services for all personal and business banking needs including checking, savings, digital banking, personal lending, business lending, agricultural lending, business support, deposit and treasury, investment services, trust and IRAs and stock purchases. LCNB Corp. common shares are traded on the NASDAQ Capital Market Exchange® under the symbol “LCNB.” Learn more about LCNB Corp. at www.lcnb.com .
Forward-Looking Statements
Certain statements made in this news release regarding LCNB’s financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions. Please refer to LCNB’s Annual Report on Form 10-K for the year ended December 31, 2020, as well as its other filings with the SEC, for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.
These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of LCNB’s business and operations. Additionally, LCNB’s financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to:
the success, impact, and timing of the implementation of LCNB’s business strategies;
the significant risks and uncertainties for LCNB's business, results of operations and financial condition, as well as its regulatory capital and liquidity ratios and other regulatory requirements, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of LCNB's work from home arrangements and staffing levels in operational facilities, the impact of market participants on which LCNB relies, and actions taken by governmental authorities and other third parties in response to the pandemic;
the disruption of global, national, state, and local economies associated with the COVID-19 pandemic, which could affect LCNB's liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses;
LCNB’s ability to integrate recent and future acquisitions may be unsuccessful, or may be more difficult, time-consuming, or costly than expected;
LCNB may incur increased loan charge-offs in the future;
LCNB may face competitive loss of customers;
changes in the interest rate environment may have results on LCNB’s operations materially different from those anticipated by LCNB’s market risk management functions;
changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
changes in regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact LCNB’s operating results;
LCNB may experience difficulties growing loan and deposit balances;
United States trade relations with foreign countries could negatively impact the financial condition of LCNB's customers, which could adversely affect LCNB 's operating results and financial condition;
deterioration in the financial condition of the U.S. banking system may impact the valuations of investments LCNB has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments;
difficulties with technology or data security breaches, including cyberattacks, that could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;
adverse weather events and natural disasters and global and/or national epidemics; and
government intervention in the U.S. financial system, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities, and the Tax Cuts and Jobs Act.
Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist shareholders and potential investors in understanding current and anticipated financial operations of LCNB and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. LCNB undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.
LCNB Corp. and Subsidiaries
Financial Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Condensed Income Statement
Interest income
$
15,535
15,945
15,322
15,957
16,556
Interest expense
1,163
1,432
1,793
1,959
2,378
Net interest income
14,372
14,513
13,529
13,998
14,178
Provision (credit) for loan losses
(52
)
(151
)
976
16
1,173
Net interest income after provision
14,424
14,664
12,553
13,982
13,005
Non-interest income
3,465
4,305
4,278
3,319
3,839
Non-interest expense
11,492
11,944
11,653
11,116
11,072
Income before income taxes
6,397
7,025
5,178
6,185
5,772
Provision for income taxes
1,157
1,283
928
1,128
746
Net income
$
5,240
5,742
4,250
5,057
5,026
Amort/Accret income on acquired loans
$
249
186
181
294
667
Amort/Accret expenses on acquired interest-bearing liabilities
$
—
1
—
2
3
Tax-equivalent net interest income
$
14,432
14,577
13,594
14,066
14,254
Per Share Data
Dividends per share
$
0.19
0.19
0.18
0.18
0.18
Basic earnings per common share
$
0.41
0.44
0.33
0.39
0.39
Diluted earnings per common share
$
0.41
0.44
0.33
0.39
0.39
Book value per share
$
18.66
18.73
18.46
18.27
18.00
Tangible book value per share
$
13.87
13.93
13.66
13.47
13.18
Weighted average common shares outstanding:
Basic
12,794,824
12,852,614
12,937,865
12,940,975
12,926,077
Diluted
12,794,852
12,852,657
12,937,901
12,941,001
12,927,666
Shares outstanding at period end
12,820,108
12,858,325
12,926,686
12,975,879
12,969,076
Selected Financial Ratios
Return on average assets
1.20
%
1.31
%
0.97
%
1.19
%
1.23
%
Return on average equity
8.80
%
9.52
%
7.08
%
8.63
%
8.75
%
Return on average tangible equity
11.81
%
12.83
%
9.56
%
11.74
%
12.00
%
Dividend payout ratio
46.34
%
43.18
%
54.55
%
46.15
%
46.15
%
Net interest margin (tax equivalent)
3.68
%
3.71
%
3.47
%
3.70
%
3.92
%
Efficiency ratio (tax equivalent)
64.21
%
63.26
%
65.20
%
63.94
%
61.19
%
Selected Balance Sheet Items
Cash and cash equivalents
$
41,144
31,730
24,485
42,736
24,795
Debt and equity securities
276,774
248,624
199,044
194,883
183,123
Loans:
Commercial and industrial
$
107,630
100,254
124,628
125,492
85,356
Commercial, secured by real estate
855,894
843,230
843,943
833,286
829,461
Residential real estate
328,265
309,692
327,689
334,349
318,009
Consumer
35,799
36,917
36,504
32,859
28,955
Agricultural
8,698
10,100
8,920
11,071
10,519
Other, including deposit overdrafts
346
363
403
283
436
Deferred net origination fees
(1,531
)
(1,135
)
(1,927
)
(1,902
)
(349
)
Loans, gross
1,335,101
1,299,421
1,340,160
1,335,438
1,272,387
Less allowance for loan losses
5,679
5,728
5,974
5,016
5,008
Loans, net
$
1,329,422
1,293,693
1,334,186
1,330,422
1,267,379
Total earning assets
$
1,634,818
1,562,392
1,547,538
1,554,537
1,462,485
Total assets
1,818,321
1,745,884
1,725,615
1,735,332
1,636,280
Total deposits
1,537,116
1,455,423
1,430,394
1,438,921
1,345,872
Three Months Ended
3/31/2021
12/31/2020
9/30/2020
6/30/2020
3/31/2020
Selected Balance Sheet Items, continued
Long-term debt
17,000
22,000
31,999
33,998
35,996
Total shareholders’ equity
239,246
240,825
238,585
237,047
233,478
Equity to assets ratio
13.16
%
13.79
%
13.83
%
13.66
%
14.27
%
Loans to deposits ratio
86.86
%
89.28
%
93.69
%
92.81
%
94.54
%
Tangible common equity (TCE)
$
177,805
179,127
176,624
174,823
170,994
Tangible common assets (TCA)
1,756,880
1,684,186
1,663,654
1,673,108
1,573,796
TCE/TCA
10.12
%
10.64
%
10.62
%
10.45
%
10.87
%
Selected Average Balance Sheet Items
Cash and cash equivalents
$
37,269
49,273
42,661
46,292
25,101
Debt and equity securities
260,147
218,816
197,788
182,371
204,912
Loans
$
1,313,803
1,313,892
1,339,608
1,318,753
1,252,554
Less allowance for loan losses
5,715
5,920
5,250
4,998
3,938
Net loans
$
1,308,088
1,307,972
1,334,358
1,313,755
1,248,616
Total earning assets
$
1,589,582
1,561,392
1,558,886
1,528,610
1,462,946
Total assets
1,775,154
1,742,947
1,741,998
1,704,303
1,638,486
Total deposits
1,488,156
1,447,217
1,445,573
1,412,082
1,346,770
Short-term borrowings
342
—
—
82
1,415
Long-term debt
19,689
30,803
33,020
34,964
38,325
Total shareholders’ equity
241,517
239,881
238,990
235,587
231,058
Equity to assets ratio
13.61
%
13.76
%
13.72
%
13.82
%
14.10
%
Loans to deposits ratio
88.28
%
90.79
%
92.67
%
93.39
%
93.00
%
Asset Quality
Net charge-offs (recoveries)
$
(3
)
95
18
8
210
Other real estate owned
—
—
—
—
—
Non-accrual loans
3,365
3,718
4,110
3,876
2,829
Loans past due 90 days or more and still accruing
—
—
94
38
39
Total nonperforming loans
$
3,365
3,718
4,204
3,914
2,868
Net charge-offs to average loans
0.00
%
0.03
%
0.01
%
0.00
%
0.07
%
Allowance for loan losses to total loans
0.43
%
0.44
%
0.45
%
0.38
%
0.39
%
Nonperforming loans to total loans
0.25
%
0.29
%
0.31
%
0.29
%
0.23
%
Nonperforming assets to total assets
0.19
%
0.21
%
0.24
%
0.23
%
0.18
%
Assets Under Management
LCNB Corp. total assets
$
1,818,321
1,745,884
1,725,615
1,735,332
1,636,280
Trust and investments (fair value)
673,742
628,414
524,502
516,076
455,974
Mortgage loans serviced
127,290
137,188
120,546
100,189
94,805
Cash management
118,494
116,792
119,520
116,615
77,471
Brokerage accounts (fair value)
299,355
292,953
267,307
255,276
235,278
Total assets managed
$
3,037,202
2,921,231
2,757,490
2,723,488
2,499,808
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
March 31,
2021
(Unaudited)
December 31,
2020
ASSETS:
Cash and due from banks
$
18,201
17,383
Interest-bearing demand deposits
22,943
14,347
Total cash and cash equivalents
41,144
31,730
Investment securities:
Equity securities with a readily determinable fair value, at fair value
2,506
2,389
Equity securities without a readily determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at fair value
237,619
209,471
Debt securities, held-to-maturity, at cost
24,695
24,810
Federal Reserve Bank stock, at cost
4,652
4,652
Federal Home Loan Bank stock, at cost
5,203
5,203
Loans, net
1,329,422
1,293,693
Premises and equipment, net
35,243
35,376
Operating leases right of use asset
6,865
6,274
Goodwill
59,221
59,221
Core deposit and other intangibles
3,108
3,453
Bank owned life insurance
42,416
42,149
Interest receivable
8,665
8,337
Other assets
15,463
17,027
TOTAL ASSETS
$
1,818,321
1,745,884
LIABILITIES:
Deposits:
Noninterest-bearing
$
475,127
455,073
Interest-bearing
1,061,989
1,000,350
Total deposits
1,537,116
1,455,423
Long-term debt
17,000
22,000
Operating lease liabilities
6,998
6,371
Accrued interest and other liabilities
17,961
21,265
TOTAL LIABILITIES
1,579,075
1,505,059
COMMITMENTS AND CONTINGENT LIABILITIES
—
—
SHAREHOLDERS' EQUITY:
Preferred shares – no par value, authorized 1,000,000 shares, none outstanding
—
—
Common shares – no par value, authorized 19,000,000 shares; issued 14,196,008 and 14,163,904 shares at March 31, 2021 and December 31, 2020, respectively; outstanding 12,820,108 and 12,858,325 shares at March 31, 2021 and December 31, 2020, respectively
142,639
142,443
Retained earnings
117,863
115,058
Treasury shares at cost, 1,375,900 and 1,305,579 shares at March 31, 2021 and December 31, 2020, respectively
(21,859
)
(20,719
)
Accumulated other comprehensive income, net of taxes
603
4,043
TOTAL SHAREHOLDERS' EQUITY
239,246
240,825
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,818,321
1,745,884
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2021
2020
INTEREST INCOME:
Interest and fees on loans
$
14,535
15,227
Dividends on equity securities with a readily determinable fair value
13
14
Dividends on equity securities without a readily determinable fair value
6
16
Interest on debt securities, taxable
718
950
Interest on debt securities, non-taxable
224
285
Other investments
39
64
TOTAL INTEREST INCOME
15,535
16,556
INTEREST EXPENSE:
Interest on deposits
1,028
2,117
Interest on short-term borrowings
1
7
Interest on long-term debt
134
254
TOTAL INTEREST EXPENSE
1,163
2,378
NET INTEREST INCOME
14,372
14,178
PROVISION (CREDIT) FOR LOAN LOSSES
(52
)
1,173
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
14,424
13,005
NON-INTEREST INCOME:
Fiduciary income
1,529
1,103
Service charges and fees on deposit accounts
1,366
1,295
Net gains on sales of debt securities
—
221
Bank owned life insurance income
267
601
Gains from sales of loans
43
120
Other operating income
260
499
TOTAL NON-INTEREST INCOME
3,465
3,839
NON-INTEREST EXPENSE:
Salaries and employee benefits
6,433
6,768
Equipment expenses
368
287
Occupancy expense, net
794
682
State financial institutions tax
444
436
Marketing
268
177
Amortization of intangibles
257
260
FDIC insurance premiums (credit), net
113
(1
)
Contracted services
540
402
Other non-interest expense
2,275
2,061
TOTAL NON-INTEREST EXPENSE
11,492
11,072
INCOME BEFORE INCOME TAXES
6,397
5,772
PROVISION FOR INCOME TAXES
1,157
746
NET INCOME
$
5,240
5,026
Dividends declared per common share
$
0.19
0.18
Earnings per common share:
Basic
0.41
0.39
Diluted
0.41
0.39
Weighted average common shares outstanding:
Basic
12,794,824
12,926,077
Diluted
12,794,852
12,927,666
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